LisaT

We are hopeing to move to Perth later this year but are considering keeping our house here long term as an investment and letting it out.
I am aware once we buy in Australia we will be liable for 40% tax here in the UK.
Can anyone give any advice on doing this and what is our best option. Is there any way we can avoid this tax?

GinaUK

Whatever gave you that idea???? Once your living in Australia you are taxed there on your worldwide income. That will include your rental income from the UK if you let your house. You will declare your rental income (less any allowable expenses) to the Oz taxman on your annual tax return. There is no 40% UK tax payable.

Gina

LisaT

I'm not too worried about the income, more interested in the long term saleable value. That is where I was under the impression we would be heavilt taxed on the profit made when we do sell the second house here in the UK. Am I wrong?

flip

As far as I'm aware you're taxed on any increase in value from date of residency but not on the capital.

Centurion

Before you rent out your UK home make sure you have THREE valuations on the property done in writing from real estate agents (the higher the better). You will pay capital gains tax on the difference between that and the sale price come the time of sale - NOT on the whole amount, just the balance.

I spoke to the ATO just yesterday on this subject, albeit a property in Australia and not the UK but the same principal will apply no doubt.

NedKelly

I think you will find that you need a valuation by a certified valuer, that's what we were advised. It wasn't cheap.

Kelli28

hi we have rented out our house you do have to tell the tax man here what your incomings are but we maneged to not have a profit and claim depreciation on so you get tax back you only pay 40% if you buy a home here as your uk one is no longer your primary residance im heading back this yr and i can claim the tax my flights as costs to the house so that takes care of any income and i get cheap flights home hope that makes some sense to you

stevo

Im glad we are back on this subject, as I too am in need of some clarification, even though there have been a few threads already.
Im not hijacking your thread Lisa, I'm just asking some questions that may help both of us since we are in the same boat.

So from what everyone is saying, you pay tax on global income in Oz (but only on the profit made?), but will also pay tax in the UK (unless it is non profit making due to some more creative accounting).
Is it not wierd to be taxed twice on the same thing?
So when I fill out my P85 as I leave the country, I declare that I own a property and will be renting it out. The rental value will be a bit more than the mortgage but after "expenses" it is the same.
My lettings agent has said that I must be declared "out of the country for more than 6 months of the year" as I will be emigrating, and will then be "subject to giving 22% to the inland revenue".
Should I get myself another agent?

Finally, does anyone find it better to have an accountant on the UK, or Oz or both?

Thanks for the advice everyone, but I am almost at the point of just selling up to avoid all the agro of it all.
Stevo

Grayling

There is a 'double taxation' agreement between the UK and Australia which means that you only pay tax in one country.

You can get credits against Australian tax on any tax paid in the UK.

This is an area for specialist advice.

G

stevo

Thats good advice G, thanks for that.

Time to pay out for an accountant who knows about international taxation methinks.

Kelli28

you will only pay tax in the uk if your profit is over the taxable threshold i think its about £6k and if the house is in joint names you can double it. 6k each name and the letting agent should give you forms to fill out so that you wont pay tax in the uk its simple really as long as your not making a fortune from it and you dont plan to buy in aus while you still own the uk one

Grayling

Some of us (such as me) will be over the taxable threshold.

G

RichnK8

We will be keeping our house in the UK but will be travelling to Austarlia on a 457 visa. As we are then temporary residents in Australia (for the timebeing) I presume we do not pay tax in Australia on our world wide income and therefore not on our UK rental income. Is this correct?

stevo

Thanks Kelli, thats an interesting point. The rent for my place will be just about covering the mortgage, so thats one less thing for me to worry about. Since it will be my only UK income it makes sense I suppose.
I am just after a bit of extra equity as my UK place is in a nice area and I also have concerns about the economy and interest rates in Oz, so I will be renting there for a while, to see what happens and get a feel for it.

Since I will be "out of the UK for more than 6 months", I have to sign for this in the "Landlords instructions" form that I have to go through to get the place rented.
It states that if I cannot provide an exemption certificate, tax will be withheld at the basic rate, currently 22%.
No one seems to have mentioned this on BE website (I have searched for threads about it), has anyone else come across this problem?
22% would turn a small profit into a loss for me.

Grayling, you must be doing OK if you are making £6k+ p/a PROFIT. Nice one.

Grayling

Not really....it's just that both my wife and myself have other UK based income which puts us above the threshold.

G